"When fascism comes to America, it will be wrapped in the flag and carrying the cross."
-- Sinclair Lewis

Thursday, April 14, 2016

Hillary Clinton And The Culture Of Corruption

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New Yorkers elected Hillary to the U.S. Senate twice. Before they vote Tuesday they should ask themselves what she accomplished to make their lives better while they were providing her with that stepping stone to great wealth and career advancement. And unless said voter was a political insider or a Wall Street bankster, the answer would be nothing. She didn't do a damn thing for New Yorkers. She wrote and passed 3 bills, one to change the name of a stretch of highway in Orchard Park near Buffalo to the Timothy J. Russert highway (after the NBC News anchor), one to change the name of the Major George Quamo Post Office Building in Averill Park a tiny town with 1,693 people in Rensselaer County, and one to establish the Kate Mullany National Historic Site in Troy. Leadership! If you were a Wall Street bankster, on the other hand, you have plenty to be thankful for. Hillary protected your interests, maybe not as much as Chuck Schumer has, but as much as Mitch McConnell, Paul Ryan, John Cornyn or any other conservative crook you pay off. Not counting the millions of dollars Wall Street has pumped into the Clinton household in terms of legalistic bribes called speaker's fees, the Financeial Sector has given more money to Clinton than any other person who ever served in Congress other than Obama-- and he's already been president for 7 years and she's catching up fast. To date, they've given her campaigns $42,160,423. Goldman Sachs has been especially generous to her-- although Morgan Stanley, JPMorgan Chase, and Bank of America are among the top sources of contributions to her presidential race.Yes, Chuck Schumer is even worse and more corrupted but Hillary Clinton is the personification of the systemic corruption between Wall Street and Washington politics. An article by David Dayen in yesterday's New Republic, which doesn't even mention her name, gets to the core of the corruption and why the banksters feel they have to bribe politicians. His article, Why the Goldman Sachs Settlement Is a $5 Billion Sham, should be an advertisement for electing Bernie Sanders, whose name is invoked by Dayen in the very first paragraph.

“Recently Goldman Sachs reached a settlement with the federal government for $5 billion because they were selling worthless packages of subprime mortgages,” Bernie Sanders shouted (as he does) in the last Democratic presidential debate. “If you are a kid caught with marijuana in Michigan, you get a police record. If you are an executive on Wall Street that destroys the American economy, you pay a $5 billion fine, no police record.”

As Dayen points out, the situation is even worse than what Bernie warned about. The $5 billion fine is a way for the Feds to assure the public that there's been some accountability when there's been none. Dayen claims "you can make a credible case that Goldman won’t pay a fine at all. They will merely send a cut of profits from long-ago fraudulent activity to a shakedown artist, also known as U.S. law enforcement." Worse yet, "Goldman Sachs doesn’t own any of the loans it’ll be modifying. They were sold to investors years ago. Goldman will quite literally pay that fine with someone else’s money; in fact, the money comes from the very investors Goldman victimized, by selling them toxic securities under false pretenses."$1.8 billion of the "fine" mandates that Goldman loan money-- on which they will make a profit-- in poor communities they usually neglect, laudable but hardly a fine or a penalty.

This brings the $5 billion settlement down to $3.2 billion. But only $2.385 billion of the total comes in the form of a cash civil penalty. The rest is tax deductible, as a business expense. Considering the indeterminate dollar value of the consumer relief, it’s hard to say how much money Goldman will be able to write off. But going with the Justice Department’s numbers, you have $2.615 billion in tax-deductible penalty, which at a 35 percent corporate tax rate equals a write-off of $915 million. That means nearly $1 billion of the settlement is effectively financed by taxpayers.So now we’re at approximately $2.3 billion. But let’s go back: The misconduct in question occurred between 2005 and 2007. The real value in 2016 dollars of a portion of profits made from 2005 to 2007 is substantially less, perhaps closer to $2 billion. More important, Goldman got to keep the money it made illegally for a decade before having to give any of it back. Goldman’s asset-management unit consistently predicts annual growth above ten percent, meaning that the company fully expects to double its money within ten years. Taking that into account, Goldman didn’t really pay a penalty at all, but used ill-gotten gains to generate a bunch of money, only returning some principal well after the fact while keeping the returns.Goldman Sachs made far more than $2 billion on the sale of mortgage-backed securities, by the way. Check out this list from the settlement documents of all the securitizations they issued that are covered by the settlement; it comes to roughly 530 securitizations, each of which typically held $1 billion in loans. I wouldn’t insult Goldman’s money-earning prowess by suggesting it only made $2 billion in profit on $530 billion in mortgage-backed securities. So even if you think Goldman is paying some kind of penalty, at best it’s a cut of the profits.And who benefits from Goldman’s payments? Not the investors who were the actual victims of the misconduct; as I noted before they end up paying more money by seeing principal cut on the loans they own. Some homeowners get affordable loans or reduced mortgage debt, even though Goldman Sachs specifically harmed investors. But the biggest beneficiaries in this transaction are the Justice Department, the New York Attorney General’s office, and the other state and federal agencies who receive cash awards, from the civil penalty and the resolution of other claims.The upshot: Law enforcement settled a case on behalf of investors and then walked away with the proceeds, while investors got nothing. Goldman Sachs and the Justice Department get to divvy up the profits of a fraud scheme perpetrated on the public.The Goldman Sachs settlement is the last of a series of enforcement actions hammered out by a state/federal task force on financial fraud, co-chaired by New York Attorney General Eric Schneiderman. Four other banks-- JPMorgan Chase, Bank of America, Citigroup, and Morgan Stanley-- paid similarly dubious fines over the packaging and sale of fraudulent mortgage-backed securities. The origins of this task force represent a failed choice by Schneiderman that let even more damaging misconduct on the part of banks go relatively unpunished....At that March 9 Democratic debate, Sanders closed his remarks on Goldman Sachs by vowing, “we are going to bring justice back to a broken criminal justice system.” He has no idea how dire that need is. We don’t have a justice system with the courage to convict everyone, regardless of wealth and power. And that ensures that the wealthy and powerful will keep committing crimes.

There is no law that Hillary Clinton wrote that allows this kind of collusion between Wall Street and government. Her eagerness-- no less than Paul Ryan's, Ted Cruz's or John Kasich's eagerness-- to benefit from this corrupt system is what keeps it alive and thriving. Keep electing corrupted politicians like Hillary Clinton, Chuck Schumer, Ted Cruz, Paul Ryan, Mitch McConnell, et al, and you are voting to keep this system in place. The only candidate who will end it once and for all is Bernie Sanders.Remember when she promised to look into releasing the transcripts of her secret speeches to the Goldman Sachs banksters who bribed her directly with $675,000? "From Goldman Sachs alone," wrote Shaun King in the NY Daily News yesterday, "she earned twice as much as Bernie's entire net worth."

In just 12 speeches delivered to big banks and Wall Street investment firms, Clinton made $2,935,000 from 2013-2015. That's more than the average American makes in their lifetime. An average college graduate is expected to earn $2.4 million in the United States. An average high school graduate just $770,000.The very executives that have paid Clinton over and over and over again to come speak to them-- guess what has happened to their income since 1999? It doubled while everyone else's tanked.The Clintons have actually earned an astounding $153 million in speaking fees since leaving office. Do your own math on how much their income has increased since 1999. Asked about the millions Clinton has made from corporations, Sheila Krumholz, executive director of the Center for Responsive Politics, told Time Magazine.“It's big money. They're spending it because they have far greater sums riding on those decisions that they're trying to shape. Corporations or associations must justifiably make these investments because everyone knew for many years that Clinton would always remain a power broker. Every man or woman on the street thought Hillary Clinton would run again."Are we to ignore all of this? How? Why? Are we expected to somehow believe that these corporations and banks and insurance companies spent tens of millions of dollars because they love the quality of her oratory? Did Goldman Sachs literally have her speak again and again and yet again because she was hitting home runs each and every time or because they wanted to curry favor with who they believed would be the next president?When Elizabeth Warren, speaking to Bill Moyers, told the painful tale of two Clintons-- one, an unbought and unbossed First Lady and another, influenced by Wall Street lobbyists in the Senate-- are we expected that she’s now back to her 1996 self?

Goldman Sachs and the elderly gents who decide who the Daily News endorses may prefer Hillary, but yesterday's endorsement by the Transport Workers Union Local 100, representing 42,000 workers in New York, is more meaningful.